Hospitals and other health care providers are bracing for the damaging impact they say would result under Gov. Dannel P. Malloy's budget plan, while the governor's office is counting on implementation of the federal Affordable Care Act to offset cuts in those areas.

"This will impact access to key services and probably lead to the elimination of key jobs," said Mike O'Farrell, spokesman for Lawrence + Memorial Hospital in New London, which is anticipating losing at least $2.8 million of the $12 million in state funds it receives as reimbursement for caring for those with inadequate or no health insurance. "We can't absorb these cuts. None of the hospitals can."

David Whitehead, president and chief executive officer of The William W. Backus Hospital in Norwich, had similarly dire predictions.

"This is nothing but devastating for hospitals and patients," he said, adding that Backus stands to lose $5.4 million in fiscal 2014 and $10.8 million in fiscal 2015, funds the hospital was expecting to receive as reimbursement for covering uninsured and underinsured patients.

"This budget plan places us at the tipping point - dramatically altering our region's safety net, affecting programs, services and those who provide them," he said.

Both hospitals urged local lawmakers to oppose the governor's plan. Bruce Cummings, president and chief executive officer of L+M, sent an email message to the hospital's 3,000 employees urging them to contact lawmakers.

The Connecticut Hospital Association issued a statement Wednesday, saying that the hospital cuts would amout to "shredding the state's health care safety net."

Benjamin Barnes, secretary of the Office of Policy and Management, said the budget proposal would provide $135 million in fiscal 2014 for uncompensated care reimbursements to hospitals, about half of the 2013 figure, which had been reduced 25 percent during budget adjustments last fall. The entire amount would be eliminated in fiscal 2015.

The plan is based on the premise that once the state's health insurance exchange is operating in 2014, more of the state's uninsured or underinsured residents would be covered either by private insurance or expanded Medicaid eligibility, so an uncompensated care fund would become virtually obsolete.

The Connecticut Health Insurance Exchange is on track to begin enrolling residents in October, with coverage starting Jan. 1, 2014, said Jason Madrak, chief marketing officer for the exchange. Federal subsidies and reimbursements would offset the costs of expanded Medicaid and private insurance through the exchange.

"There are gambles and bets being made that we'll be up and running, and we're up for the challenge," Madrak said.

Hospitals, however, are not reassured.

"While we applaud the Governor's decision to move Medicaid patients into the Connecticut Health Insurance Exchange, it must be done in a responsible way so there is no gap in coverage, and so the healthcare savings achieved from that move is reinvested in the healthcare system," the state hospital association said in its statement.

In addition to the uncompensated care cuts, Barnes said the governor's budget includes other changes that bring the total cuts to hospitals and other providers to more than $200 million in fiscal 2014, and $340 million less in fiscal 2015. This is achieved by reducing Medicaid fraud and moving some Medicaid recipients into private insurance through the insurance exchange as well as with reductions in funds to nursing homes and savings in prescription drug coverage and medical interpreter services, among other areas.

The savings are offset by increased Medicaid reimbursements to primary care doctors that would bring rates to Medicare levels and by expanding Medicaid eligibility to more low-income adults, Barnes said.

Nancy Cowser, vice president of planning at United Community & Family Services in Norwich, said the governor's budget would provide about $500,000 less in state funding to the agency than it currently receives. The agency, with a staff of 320 and primary care clinics in Norwich, Griswold and Plainfield, as well as behavioral health offices in New London and Colchester and a dental office in Groton, now receives about $7 million in state aid. It serves about 14,000 patients.

At risk is the agency's Healthy Start Program, which serves pregnant women, and provides coverage for uninsured patients and programs that provide rides to medical appointments and subsidize a thrift store, among others, Cowser said.

"Will we have reduced hours? Maybe. Will we have to eliminate staff? Absolutely," she said.

The new insurance exchanges, she said, are still an uncertainty.

"We don't know what the exchanges will look like, what the reimbursement rates will be," she said. "And not all folks will be insurable."

Not all health care providers are unhappy with Malloy's budget, however. Mark Masselli, president and chief executive officer of The Community Health Center, called it "a good budget" because it "focuses on trying to revive the economy, and there's nothing better for the people we serve than that they have jobs."

He added, though, that he is hoping for more funding for school-based health centers, and emphasized the importance of ensuring that plans for the health insurance exchange move forward. CHC, based in Middletown, operates clinics in New London and Groton as well as local school-based health centers.

"The big issue for Connecticut will be to make sure the exchange is up and running and that it be able to handle all the people eligible," he said. "There's a lot of work to do between now and then."